Thanksgiving week is here and the Christmas shopping season will soon begin. While the American consumer still seems to be struggling, they are expected to hit the stores anyway in full force. The S&P 500 2.4% off highs and questions swirl of whether we'll see a further pull-in or the always fun Santa Claus rally. Volume will be light and action will likely be muted this week but all we need are some promising Black Friday and Cyber Monday numbers next week and the floor could be set for new 2010 highs. So run out and buy your kids some Squinkies before they're sold out!
Thoughts on an approach to this market
I had a great time last week enjoying a few beers talking stocks and markets with The Reformed Broker himself, a heavyweight in the financial blogging arena. It's quickly becoming a common theme among the smartest minds I've run into that adopting longer timeframes and larger ideas is a must for finding outperformance. We are all seeing the markets change before us with the wild volatility of the last few years quickly dying out. The last few years have been fun for the active trader: a 55% collapse from late-2007 highs to early 2009 lows followed by an 80% rally to April 2010 highs and then a flash crash just to scare the bejesus out of anyone trying to hold on to companies.
Yet, I'm of the opinion that it would unwise to believe this will continue. As fear abates, volatility will fall and the best companies will begin to shine through the mess. Concerted and orchestrated actions between and among governments and central banks around the world should be calming mechanisms for financial markets and open up the paths for innovation and reward. Finding great companies and sticking with them, in my opinion, will be the best strategy for 2011 and beyond.
As a side note, Josh also let me in on Instapaper, already a life-changer for a financial news junkie like me. It even integrates with Google Reader so I can better sift through my daily blog reading! Awesome idea.
Brandon R. Rowley
"Chance favors the prepared mind."
*DISCLOSURE: Nothing relevant.